{"id":65892,"date":"2022-10-26T12:13:47","date_gmt":"2022-10-26T11:13:47","guid":{"rendered":"https:\/\/nationalwire.com.ng\/?p=65892"},"modified":"2022-10-26T12:13:47","modified_gmt":"2022-10-26T11:13:47","slug":"q3-2022-guaranty-trust-holding-company-plc-higher-income-tax-expense-pressures-profitability","status":"publish","type":"post","link":"https:\/\/nationalwire.com.ng\/sub\/q3-2022-guaranty-trust-holding-company-plc-higher-income-tax-expense-pressures-profitability\/","title":{"rendered":"Q3 2022: Guaranty Trust Holding Company Plc Higher Income Tax Expense Pressures Profitability"},"content":{"rendered":"

… as Profit After Tax Rose Marginally By 0.7% To N130.35 billion<\/p>\n

Guaranty Trust Holding Company Plc (GTCO) has released its nine-month unaudited financial statements after market close on Tuesday, reporting a marginal increase (+0.2% y\/y) in EPS for the period under review (9M-22: NGN4.55 vs 9M-21: NGN4.54) as the HoldCo\u2019s higher income tax expense (+74.9% y\/y) pressured the bank\u2019s bottom-line.<\/p>\n

\"\"GTCO state of financial health released for verification by the NGX Exchange, shows Interest income grew by 19.2% y\/y to NGN232.49 billion, propelled by all contributory lines. Precisely, income from loans and advances to customers (+13.2% y\/y to 159.87 billion), investment securities (+26.1% y\/y to NGN62.93 billion), cash and balances with banks (+151.0% y\/y to NGN9.67 billion), and loans and advances to banks (+35.2% y\/y to NGN22.76 million) were the drivers of the growth recorded.<\/p>\n

Similarly, interest expense increased by 33.4% y\/y to NGN42.80 billion on the back of higher fees expensed on customer deposits (+36.7% y\/y to NGN39.35 billion), financial institutions (+8.4% y\/y to NGN1.23 billion) and borrowings (+7.6% y\/y to NGN2.00 billion).<\/p>\n

Further x-ray of the company’s result revealed that despite an improvement in the HoldCo\u2019s funding mix (CASA as at 9M-22: 86.6% vs FY-21: 85.7%), the higher cost on customers\u2019 deposits was driven by the CBN\u2019s revision of the minimum interest rates payable on local currency savings deposits from 10% to 30% of the Monetary Policy Rate (MPR).<\/p>\n

\"\"<\/p>\n

Accordingly, the HoldCo recorded a 16.4% y\/y increase in net interest income. Following lower charges for credit impairments (-38.3% y\/y), the net Interest income (ex-LLE) settled at NGN185.99 billion, translating to an 18.5% y\/y growth.<\/p>\n

The HoldCo reported a slight increase in its non-interest income (+3.8% y\/y to NGN123.18 billion) due to the (1) gains from FX trading (+43.2% y\/y to NGN31.71 billion) and investment securities trading (+36.6% y\/y to NGN4.91 billion) and (2) increase in net income from fees & commission (+12.5% y\/y to NGN58.31 billion). These were enough to offset the lower income from FX revaluation (-25.2% y\/y to NGN11.57 billion).<\/p>\n

Operating expenses (OPEX) increased by 12.7% y\/y to NGN139.44 billion following the increases in deposit insurance premium (+21.1% y\/y to NGN10.74 billion), personnel expenses (+8.3% y\/y to NGN30.54 billion), and AMCON levy (+6.4% y\/y to NGN23.29 billion). Given that OPEX grew faster than operating income (+12.2% y\/y), the cost-to-income ratio (ex-LLE) settled at 45.1% (9M-21: 44.9%).<\/p>

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Overall, the HoldCo\u2019s profit before tax was 11.7% y\/y higher at NGN169.72 billion, while profit after tax grew by 0.7% y\/y to NGN130.35 billion owing to the 74.9% y\/y increase in the income tax expense to NGN39.38 billion.<\/p>\n

According to leading research firm in the domestic economy, Cordros Securities, “We like that GTCO could keep its costs at bay, seeing as the cost-to-income ratio expanded marginally by 0.4% amid the inflationary pressures in the operating environment. However, we are concerned about the HoldCo\u2019s\u00a0marginal growth in its non-funded income and will seek management clarity on this. For the rest of the year, we are optimistic that the HoldCo\u2019s\u00a0appetite for risky assets and the higher yields in the fixed-income market will support earnings. Although, as we highlighted in our\u00a0\u00a0H1-22 First Glance,\u00a0the higher income tax expense incurred given the implementation of the 2021 Finance Act will continue to pressure the bank’s profitability.\u00a0Our estimates are under review.<\/p>\n

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Guaranty Trust Holding Company Plc (GTCO) has released its nine-month unaudited financial statements after market close on Tuesday, reporting a marginal increase (+0.2% y\/y) in EPS for the period under review (9M-22: NGN4.55 vs 9M-21: NGN4.54) as the HoldCo\u2019s higher income tax expense (+74.9% y\/y) pressured the bank\u2019s bottom-line.<\/p>\n","protected":false},"author":6,"featured_media":25672,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[23,17],"tags":[9141],"coauthors":[2391],"class_list":["post-65892","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-business","category-news","tag-gtco"],"yoast_head":"\nQ3 2022: Guaranty Trust Holding Company Plc Higher Income Tax Expense Pressures Profitability - National Wire<\/title>\n<meta name=\"description\" content=\"Guaranty Trust Holding Company Plc (GTCO) has released its nine-month unaudited financial statements after\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/nationalwire.com.ng\/sub\/q3-2022-guaranty-trust-holding-company-plc-higher-income-tax-expense-pressures-profitability\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Q3 2022: Guaranty Trust Holding Company Plc Higher Income Tax Expense Pressures Profitability - 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